Copyright 2010, The World Bank Group. All Rights Reserved. Business tendency surveys, part 1 1 Business statistics and registers

Copyright 2010, The World Bank Group. All Rights Reserved. Qualitative information Information asked in BTS is qualitative In most business surveys respondents are asked for quantities In BTS respondents are asked for judgments, for example ‘higher than normal’ BTS are easier to respond to than conventional surveys 2

Copyright 2010, The World Bank Group. All Rights Reserved. Information collected BTS collect information about variables which give an overall picture of a sector of the economy Most BTS collect information on production, order books, new orders, stocks of finished goods, exports, employment and prices Information may also be collected for variables that are difficult to measure by conventional methods, e.g.  Capacity utilization  Production bottlenecks  Plans and expectations for the immediate future  Managers' views on the overall economic situation 3

Copyright 2010, The World Bank Group. All Rights Reserved. Business cycle The statistical series derived from BTS are particularly suitable for monitoring and forecasting business cycles Usually the series are seasonally adjusted Some series provide advance warning of turning points in the business cycle Such series are known as leading indicators in cyclical analysis 4

Copyright 2010, The World Bank Group. All Rights Reserved. Use of business tendency information BTS in the past were meant for the direct benefit of the respondents They used to be carried out by trade associations Today, BTS are a valuable tool for economic analysis for all types of users So-called confidence indicators derived from BTS summarize key variables in a single synthetic indicator 5

Copyright 2010, The World Bank Group. All Rights Reserved. Choice of questions Priority goes to indicators which:  Measure an early stage of production (e.g. new orders, order books)  Respond rapidly to changes in economic activity (e.g. stocks)  Measure expectations (e.g. future production plans, business climate) 6

Copyright 2010, The World Bank Group. All Rights Reserved. Simplicity of questionnaires Filling out questionnaires should take little time Two sides of an A4 is considered the maximum 3-5 option multiple-choice questions are used for most variables 7

Copyright 2010, The World Bank Group. All Rights Reserved. Assessment of current situation Questions about the current situation are about comparison with the ‘normal situation’ Options can be ( ) above normal ( ) normal ( ) below normal Questions in this form are e.g. about stock variables such as production capacity, levels of order books or inventories 8

Copyright 2010, The World Bank Group. All Rights Reserved. Appreciation of past and future changes Questions about expected changes have the form of e.g. ( ) increase ( ) no change ( ) decrease Questions relate to flow variables such as production, new orders, employment or selling prices Questions normally specify the reference period, e.g. the last three months or the next six months 9

Copyright 2010, The World Bank Group. All Rights Reserved. Capacity utilization Two common BTS variables require a different form of question:  Capacity utilization  Constraints on production Questions may be multiple choice between “more than adequate”, “adequate”, “less than adequate” More commonly, answers are requested in percentage terms, e.g. “Present production capacity utilization rate in percent is: ( ) up to 50; ( ) 51-60; ( ) 61-70; ( ) ” 10

Copyright 2010, The World Bank Group. All Rights Reserved. Production restraints Questions offer a list of possible problems Respondents are requested to tick one or more boxes, e.g.  Demand constraints: – Insufficient domestic demand ( ) – Insufficient foreign demand ( )  Supply constraints – Shortage of equipment ( ) – Insufficient capacity ( ) – Shortage of labor ( ) – Shortage of raw materials ( ) – Shortage of capital ( ) 11

Copyright 2010, The World Bank Group. All Rights Reserved. Seasonality Many industries have seasonal patterns Respondents should be told whether or not to take account of seasonality Questions may start with: “Ignoring seasonal factors are stocks of finished goods ….?” All data collected in BTS should be tested for seasonality and if necessary adjusted 12